AT&T/DirecTV Deal Is More FCC Regulation by Extortion

July 24, 2015

WASHINGTON D.C. — Today, the FCC announced that it had approved AT&T’s purchase of satellite company DirecTV, subject to several key conditions. While some of these conditions concern expanded fiber-to-the-premises deployment and discounted broadband for the poor, others include major de facto regulatory concessions. Most notable are the requirement that AT&T (i) turn over each of its interconnection agreements in advance for review under the vague “just and reasonable” standard set by the FCC’s Open Internet Order and (ii) hire an internal compliance officer as well as accepting an “external” compliance officer to be appointed, presumably, by the FCC.

“If anyone doubted that the FCC was trying to impose rate regulation on the Internet, it’s time to wake up and smell the tariffs,” said Berin Szoka, President of TechFreedom. “The Commission is recreating traditional rate regulation in all but name. It’s astonishing how fast the FCC has moved to expand ‘net neutrality’ far beyond its original meaning: Last May, Wheeler assured us that interconnection was ‘a different matter that is better addressed separately,’ yet here we are. The FCC is using a deal that in no way reduced broadband competition and actually created a stronger competitive alternative to cable to recreate the regulatory regime designed for the old AT&T, a true monopoly. There’s no evidence of a problem in the interconnection market, where prices have fallen a over a thousand-fold since 2000.”

“Why would AT&T agree to such conditions? Because the FCC has unchecked discretion to regulate through merger review,” continued Szoka. “Extortion has long been standard operating procedure at the FCC. Yet even for the FCC, this is a new low. Forcing AT&T to accept a government wet nurse to monitor the company may give the FCC great leverage to impose extra-legal regulation on the company for the next four years. Apple’s experience with the monitor appointed by DOJ in the ebooks settlement makes clear that what begins as monitoring a company’s compliance can quickly morph into far broader meddling into key decisions by the company.

“The FCC knows its Internet power grab rests on legal quicksand, so it’s using the merger review process to preserve its regulations even if they fail in court,” concluded Szoka. “Wheeler’s doing precisely what he proposed back in 2011: using a ‘mutually-agreed-to set of merger terms’ as ‘the de facto regulatory template.’ Wheeler’s candor nearly derailed his nomination. He refused to disavow his views, and now he’s just thumbing his nose at Congress. It’s high time that Congress reined in the FCC. Ideally, that would mean barring the agency from imposing merger conditions it couldn’t impose by regulation, and clarifying that, if a regulation fails in court, merger conditions that do the same thing should be void, too. But at a minimum, it should mean blocking enforcement, or any extension of the new rules created by the Open Internet Order.”

Tech Freedom is a non-profit, non-partisan technology think tank launched in 2011. TechFreedom is excited about the future. Focusing on issues of Internet freedom and technological progress, we work to protect innovation and discovery from powers that fear change. Technology is the great driver of social progress and human well-being, and we aim to keep it that way.